When Nudged, Colorado Health Care Consumers Shop but Don't Buy

February 13, 2017

How much do consumers shop around for health care? Various devices, including price transparency tools, health insurance exchanges and direct interventions, are trying to help consumers decipher their health care needs and provide potential opportunities to save.

In a paper published in Health Affairs, Tim Layton and coauthors found that when they tried to help consumers in Colorado switch to a plan that would save them money during open enrollment, the consumers went on the website about 23 percent more often, but the information did not have a major influence on their decision to choose a new health plan.

Marketplaces offer tools to help consumers compare prices and benefits among different plans. Once one is enrolled, however, consumers can miss out on potential savings if they do not look at upcoming costs for their current plan, particularly with higher premiums and cost sharing. In this study, the researchers used a large-scale randomized intervention to test the effects of a “nudge” that encouraged enrollees whose coverage was slated to be automatically renewed in 2016 to shop for a plan.

The authors tested two types of messaging: generic “you could save money” messages and more personalized messages. Personalized information about potential savings had no more effect than generic encouragement to shop. The effect of the interventions on shopping was stronger for younger and unsubsidized consumers than for older and subsidized ones, but there was no detectable effect on plan switching or the premium paid for any population.

The mean amount of potential savings was substantial—$735 per year, or 18 percent of the average net (after tax credit) premium of $4,042. However, only 43 percent of existing enrollees in the federally facilitated Marketplace actually switched plans for 2016, saving an average of $502 over twelve months.

This study was one of the first to assess whether direct marketing to affected individuals might have an impact. But, apparently, simply making consumers aware of cost savings may not be enough to push consumers to act on their potential savings.

According to Layton, “Our study leaves us with one of two conclusions: it's either the case that letters and emails can get people to shop but the shopping experience is so complicated that they just give up and stick with the plan they previously chose. Or, that most people are just happy with the plan they're in. The next step is to figure out which of those conclusions is the right one.”